Sony, Samsung start enforcing minimum prices on HDTVs

[Matthew DeCarlo]

Amid declining global sales, Sony and Samsung are instructing US retailers to maintain minimum prices for televisions to increase profitability, according to the Wall Street Journal. The move is expected to help protect profits of both manufacturers as well as retailers such as Best Buy and Target, which are facing increasingly stiff online competition.

Sony's policy launched last month and covers about 120 TVs along with other electronics, such as camcorders, audio players and tablets, though it reportedly excludes Vaio machines. Samsung's plan was introduced earlier this year and sounds less broad, covering only "some new TV models," according to a spokesman speaking with Businessweek.

TV profit margins are notoriously thin and according to Billy Abt, co-president of Abt Electronics, it hit the point where his family's stores were making $10 on $2,000 TVs. "This allows us to make a reasonable profit," Abt said. The average selling price on TVs has slipped for three consecutive years, falling 15% from $644 in 2009 to $545 last year. Despite that decline, the average consumer TV size has increased from 33 inches in 2007 to 38 inches in Q1 2012.

That trend has at least partly contributed to falling retail revenue. Best Buy, for instance, posted a 25% drop in earnings Tuesday and it's said that increasing handset and tablet sales simply couldn't offset sinking TV and computer sales. According to Best Buy, it's not just TV makers implementing strict pricing rules. An increasing number of consumer electronics companies are taking a similar approach, though no specific names were mentioned in the report.

Strict minimum prices are expected to curtail the phenomenon where shoppers visit stores to see products in person before buying them online. However, the plan isn't entirely foolproof, as rival TV outfits maintain cutthroat rates. Players like LG, Panasonic and Sharp won't enforce pricing, which could lure sales away from spendier Sony and Samsung units. "We don't think we should dictate policy between a retailer and a customer transaction," LG said.

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https://www.techspot.com/news/48725-sony-samsung-start-enforcing-minimum-prices-on-hdtvs.html

 

[slh28]

Wait what's the word for this again? I think it begins with co- and ends with -llusion

 

[cliffordcooley]

Supply and Demand

I'm glad I'm not demanding to have an HDTV. I've been thinking about one for a long time but can never justify the higher prices.

 

[amstech]

HDTV's not selling has nothing to do with them losing profit.
These companies keep attempting to expand and expand and then reality slaps them in the face.

Stop trying to grow into a global superpower and regulate your profit without the need for expansion every year. This isn't the 70's, bigger is not better.

 

[wiyosaya]

In my opinion, this is further evidence that western economics are not working.All these companies are interested in is profit. Don't get me wrong, I believe everyone has the right to make a decent living, and I do not have any answers to the problem, but in general, it seems that the current economic systems are not working.

As I see this, each year we get newer and newer technology, and each year, manufacturers expect people to rush right out and buy their newer and newer technology. That seems to equate to purchasing a $2K TV every year to these manufacturers when few people can afford to do that.

This announcement just exemplifies that Sony IS in deep economic trouble. However, I personally think that this will just exacerbate the problem, and there will be retailers that will tell Sony to take a hike, or just drop Sony all together. While Sony seems to think that this will help their bottom line, I think it is just as likely to hurt Sony and decrease sales. If I were to venture a guess, this is coming from Howard Stringer, the man, IMHO, most responsible for Sony losing their technological lead and becoming nothing more than another mediocre company selling over-priced products that offer little, if anything, over what their competition offers.

Along will come LG, Panasonic, Vizio, Sharp and others to fill the void.

And I agree with slh28. This is just as likely to garner fines in the US for price fixing.

 

[Guest]

This will allow companies like Vizio to take even more market share.

 

[Guest]

And can someone explain to me why this is not price fixing ?! Seriously no wonder LG and sharp are stying clear of this after they lost in EU for price fixing!!

And if bestbuy want to keep peaple from buying online well there something called good service !! Remove the I dont give a crap look from your staff, train them and when customer walk in to take a look you competant staff will close the sale. If customers know they will have a good service for example someone to explain to them how to connect their devices they will most likely buy from the store. If you get the feeling and online customer service if just has good as BB staff then there no point in buying in store

Ive sold electronic for 6 years and even with higher prices then Futushop people still came to us for the service

 

[Guest]

To begin with, Sony wanted to be a leader in premium HDTVs and yet it picked the inferior LCD/LED format to Plasma. No one who is informed and interested in the best image quality for movies and sports would ever buy a $3-4K Sony LED/LCD in the first place.

Secondly, how is it stores are just making $10 on a $2K TV? Why are the manufacturing costs for these 1080P panels still so expensive? Apple is about to push high resolution displays on their 13, 15 and 17 inch MacBook Pros. Something doesn't add up from a cost perspective. By now it should be very cheap to manufacture 1080P 37-42 inch LCD/LED panels.

Thirdly, these companies should have realized a long time ago that people upgrade their TVs every 5-7 years. Very few people are going to be upgrading every year or even every 2 years. At this point those who have purchased a modern 1080P TV at least in the last 4 years have very little reason to upgrade (I suppose outside of size) since image quality has hardly improved. I think it will take 4K and 8K resolution of next generation TVs and OLED technology to get people to ditch their 1080P LCD/LED/Plasmas.

Also, the Sony store shopping experience is not a pleasant one. It doesn't make one want to go there out of the blue, unlike say the Apple store.

 

[captainawesome]

Sounds pretty much like price fixing to me. Which should sound pretty much like a fine from the FCC for them!

 

[captainawesome]

Oh and just wanted to add that Sony TV's are crappy. I love my LG Cinema 3D and it was ~$100 cheaper than the Sony of the same spec

 

[nazartp]

Couple of things. Nothing prevents a manufacturer to mandate a specific price at the retail level. Price fixing is only actionable if it is a result of a collusion between market participants. As long as Sony and Samsung did not agree on this, they are just fine from the legal perspective. As far as I can see it, actually at this point promotes competition by allowing smaller market participant to be successful.

In response to wiyosaya, I see no evidence of "Western economy not working." It's working, as evidenced by stupid companies going under and the ones that know how to run a business surviving.

 

[Guest]

Samsung HDTVs suck, dont buy. I have a 40" and now I need to get a T-con board after 3 yrs of watching. Bad product.

 

[Guest]

I think is the problem economy.credit crunch did not left much to spend for expensive items. I always try to get best price/performance electronics items. But lately I dont have money to spend extra for better brand . so I go with specs and cheapest .
Sony losing money because no innovation last 5 years. I remember how much money they made them simple Walkman. Last 5 years I dont see any market leader product from them. they are always late, copy products, and did I mention they are expensive. So computer technology reset itself every 18 months . If I buy a Acer $500 laptop instead of $1200 Sony, I still have 700 bucks for spend next year another one.When companies get big they get slower, they cant move faster they cant innovate much unless they are the only dominant player. Where is the Asus transformer prime specs tablet from Sony or Iphone specs smartphone.

 

[howzz1854]

looks like my next TV will be a LG or Sharp. was already debating between a new Samsung, SONY, or a bigger cheaper Sharp.

 

[Guest]

Really? Then no economics work then cause time and time again central planning and Keynesian style economics will never work due to operator error or in reality predictable human greed. Western Economic Theory works because it tries to pit human greed against itself wwhile other forms try to deny or ignore it.

 

[LNCPapa]

You can never please everyone with a single <anything>. There is always a reason or situation to go with something less desirable to others - and that being said the only way to really flatten things out is for people to talk with their wallets. For instance, if you're concerned about heat output or energy usage then I'd avoid a Plasma. If I'm only going to watch video and am worried about color and especially black accuracy then I'd go with the Plasma. If weight and energy are of concern then I'd go with a full array LED. There will always be a niche market for special situations and as long as that isn't inappropriately scaled it will work out, but if you scale it big and the demand isn't there then it will fail.

Now back on topic - it really blows my mind that the margins are so small on TVs. I would have thought that production costs have gotten so low now that even though we're seeing lower and lower prices there was still a huge markup on them. As long as Sony and Samsung didn't work on this minimum price together then I don't think they're breaking the law - however I think it's a bad idea. TV technology has gotten so good in the last few years that even many of the "lower quality" brands are making some pretty good sets. Most people (90% +) won't care about the difference of spending double the amount for those missing features. This may be a shot in the toe for both Sony and Samsung.

 

[Renrew]

Interesting marketing strategy. Must have taken a page from Verizonband Netflix's books on how to aleanate your customers.

Go Samsung and Sony, it was nice to know ye.

 

[bandit8623]

great news! now people wont be talked into buying trash lcd's from sony. plasma kicks the crap out of lcd anyways.

 

[Rasta211]

Guess people won't be picking up these brands of TVs during Black Friday sales.

 

[Jibberish18]

This isn't a Plasma vs. LCD situation. They both have their ups and downs. This is about two companies who like to charge premium prices for their TV and for a public who isn't looking to pay that premium just for the name. I have a sort of high end LCD Sony TV (Chosen by wife) and I can tell you we pretty much gouged ABT on the price but in the end, even for the low price we payed, it wasn't worth it. Just doesn't look much better than another TV would have for the same price or lower. And that's the thing. Even if the TV looks it's price, are people willing to pay for it? And what makes Samsung and Sony think that people won't go and buy a Vizio, LG or etc. for a lower price? They already are.

 

[p51d007]

You know...back in "the old days", you bought something & kept it until it was "worn out".
I remember as a kid, when our old black & white tv FINALLY died, so we could get a COLOR tv! Now I could see what they were really wearing when they would talk about something...that is if the show was actually BROADCAST in color. The show "the wonderful world of Disney" took on a whole new meaning. Then, that tv died in 78, and they bought a fancy new "big" 25" TV! Wow! 25"! Can't get any better than that! What I had to do, to talk my parents into finally getting a "big screen" tv was like pulling teeth. We don't need a new TV...this one still works. When the stations went to digital, they finally did, but kept the old one, with a converter box, just in case the rain/clouds block the satellite reception.
Now, everything is throw away, because everyone wants to keep up with the Jones'.
Can I see the difference between an HD picture & a regular picture on tv? Yes, but,
is it worth the price to constantly upgrade, just because the tv manufacturers, or whatever consumer goods manufacturer says so? NOPE.

 

[Guest]

Start enforcing? That's funny cause the pricing has been in affect for several weeks at some retailers. Someone should have done some research before posting the article as BB and Sears have had those in place for weeks. Whatever the price is in the register, that will be the price that the manufacturer said you can sell it at. You cannot get a price match or any other discount. The only discount that is allowed will be for employees only. Anyone caught selling below what Sony and Samsung set can and will lose that brand from their respective companies.
Sony may have alot more set prices but I was a little surprised that Samsung has set prices for quiet a bit of their models. Mainly from ES6100 models and up(40" and up). Which is most of their tvs.

 

[Guest]

The Free Market doing its magic I guess ?

 

[Guest]

My expensive Sony Trinitron TV died 3 days after their 1 year warranty.. I was out 500 bucks.. bought a Phillips LCD TV at Circuit City for close to the same price.. It still works 7 yrs later... love it..